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Do Market Incentives for Hospitals Affect Health and Service Utilization? Evidence from PPS-DRG Tariffs in Italian Regions

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  • Lorenzo Cappellari
  • Anna De Paoli
  • Gilberto Turati

Abstract

We exploit variation across Italian Regions in the implementation of region-specific tariffs within a Prospective Pay System (PPS) for hospitals based on Diagnosis Related Groups (DRG) to assess their impact on health and on the use of health care services. We consider survey data for the years 1993-2007 with information on both individuals’ perceived health and their utilization of health care services. Results suggest that the introduction of market incentives via a fixed-price payment system did not lead to worst health perceptions. Instead, it marked a moderate decrease in hospitalization coupled with a clearer decrease in the utilization of emergency services. We also find mild evidence of reduced satisfaction with health care services among hospitals patients. These effects were stronger for adoptions occurring when also the national government supported the market-based approach. Results are robust to a number of sensitivity checks.

Suggested Citation

  • Lorenzo Cappellari & Anna De Paoli & Gilberto Turati, 2016. "Do Market Incentives for Hospitals Affect Health and Service Utilization? Evidence from PPS-DRG Tariffs in Italian Regions," CESifo Working Paper Series 5804, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5804
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    More about this item

    Keywords

    health reforms; subjective health perceptions; utilization of health care services;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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